Economic Worries

Watching the news nowadays can be a numbing experience.

Things are turning for the worse as one by one companies fail and job losses continue to rise. All the signs for a global meltdown on account of the sub-prime losses were already apparent in late 2007 and things really imploded in the US during the last quarter of 2008 when giant financial companies in the US filed for bankruptcies, setting off a domino effect on other sectors of the US economy, affecting consumption spending. The full impact is now being felt in the Philippines with export-oriented companies among the hardest-hit.

This recession is clearly worse than the Asian financial crisis in 1997, which took like three years to bottom out. Hopefully Obama's recovery stimulus program to revive the US economy will mitigate the negative impact somewhat.

The credit card sector, as is widely expected, will likely hit rock bottom as consumption spending nose dives. Real estate companies, well, will have to shelve their projects in the meantime.

Marc, how are things Down Under?

Denial

Since Doc and I missed the baptismal ceremony for Frodo's fourth kid last Saturday (we were both ninongs, or godfathers), we headed directly to the reception venue.

Frodo said the venue would be at Pho bac near BK. We thought BK stood for Burger King. No such restos when we arrived. Turned out the venue was Pho hoa, and BK stood for Big Kahuna with a sign board no bigger than a jeepney's.

Someone asked me about jogging in Marikina, to which I replied, "When I'm "feeling fat" that's when I jog."

This elicited a chorus of counter replies, "You're not just "feeling fat," you ARE fat. That's what you call "denial"."

So there.

No Kahment

I stayed up late last night to watch the historic inauguration of the first US black President.

I'm just wondering if it is now politically incorrect to refer to him as a "black" President? Apparently, the "safe" term is "African American." But Obama's half white, too.

Anyway, as the Americans start the year with a new administration, the Philippines welcomed 2009 on a terrible string of events: the alleged bribe attempt to free the drug dealers belonging to rich families in Ayala Alabang and the kidnapping of Red Cross volunteers in where else, Sulu.

On a more bizarre note, Rustom Padilla caused the tectonic plates to collide with the richter scale rising temporarily when he finally revealed to the world that he is really...a woman! I'm kidding, he's now officially a she-male, or whatever.

When asked on TV about how he came up with his new name, Bebe Gandanghari to match his new identity, he replied: "...because my motto is 'Be what you want to be.'" How very...Miss Gay Inter-barangay...Kalookan City North chapter! Why oh why do gays treat questions as if they're in a beauty pageant?

When asked about his lovelife, he giggled like an annoying teen-age girl, lightly touched his lips to stifle his smile while revealing his long, painted nails and said, "No kah-ment."

Prospects

How resilient is the Philippines really in riding out the current global economic crisis?

Very vulnerable, considering that relying on domestic consumption to rejuvenate the economy alone won't be enough without external demand coming from the US or Japan. As job losses continue to pile up in the US, consumption consequently takes a downturn, as can be seen by lower housing sales and the difficulties faced by the US auto industry. With around eight (8) million Filipinos working abroad, remittances-- which hit around US$17 billion in 2008 --are likely to grow slower this year.

The thing is, since the Philippines do not feature prominently in the financial markets, it is somehow less severely affected compared to say other countries with huge exposures to complicated financial instruments in the US.

Because of this, the country had less access to various capital instruments which probably explains the sluggish growth of the economy as well. However, this has clearly proven to be an advantage since the country's minimal exposure to risky financial instruments has made it more resilient to the credit crunch risks in the US.

Obama's fiscal stimulus plan for the US economy is getting a lot of flak because it relies mostly on tax cuts, rather than job creation. I think the plan is sound, though. Obama is clearly out to save ailing companies first by giving them tax breaks thereby allowing them to build up their savings first, rather than spending immediately on big infrastructure projects to stimulate demand (does the US really need another highway?) Preventing more companies from going down the drain could stem the downward trend in job cuts, and not aggravate the already-sluggish consumption spending.